===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
_______________________
Date of Report: January 20, 2004
CEMEX, S.A. de C.V.
-------------------
(Exact name of Registrant as specified in its charter)
CEMEX Corp.
-----------
(Translation of Registrant's name into English)
United Mexican States
---------------------
(Jurisdiction of incorporation or organization)
Av. Ricardo Margain Zozaya #325, Colonia del Valle Campestre
Garza Garcia, Nuevo Leon, Mexico 64000
------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F ___
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes ____ No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
N/A
==============================================================================
Contents
1. Press release announcing CEMEX's results for the fourth quarter of 2003
(attached hereto as exhibit 1).
2. 2003 fourth quarter earnings release (attached hereto as exhibit 2).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
CEMEX, S.A. de C.V. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CEMEX, S.A. de C.V.
-------------------------------------
(Registrant)
Date: January 20, 2004 By: /s/Rafael Garza
----------------------------------
Name: Rafael Garza
Title: Chief Comptroller
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
1 Press release announcing CEMEX's results for the
fourth quarter of 2003.
2. 2003 fourth quarter earnings release.
Exhibit 1
Media Relations Investor Relations Analyst Relations
Jorge Perez Abraham Rodriguez Ricardo Sales
(52 81) 8888-4334 (52 81) 8888-4262 (212) 317-6008
[CEMEX LOGO OMITTED]
Building the future(TM)
CEMEX'S FOURTH QUARTER 2003 SALES
INCREASE 10%; EBITDA GROWS 22%
MONTERREY, MEXICO, January 20, 2003 - CEMEX, S.A. de C.V. (NYSE: CX) announced
today that its consolidated net sales for the fourth quarter of 2003 were
US$1.8 billion, up 10% in dollar terms compared with the same period of 2002.
The growth in sales was due to the overall improvement in economic conditions
during the second half of the year. Our operations in Mexico, the United
States and Spain, our three largest markets, saw increased public spending in
infrastructure and housing. In real peso terms, net sales grew 8%, to MXP20.1
billion.
Our consolidated cement sales volume during the quarter was 16.3 million
metric tons, up 4% compared with the fourth quarter of 2002, while ready-mix
volumes were 11% higher at 5.5 million cubic meters.
Free cash flow for the fourth quarter decreased 19% in dollar terms compared
with the same quarter of 2002, reaching US$247 million. EBITDA (operating
income plus depreciation and amortization) grew 22% to US$509 million. Our
consolidated EBITDA margin grew to 29% in the fourth quarter of 2003 from 26%
during the same period of last year. The three percentage-point increase is
due mainly to higher sales volumes and lower SG&A expenses. In real peso
terms, EBITDA was MXP5.7 billion, up 19% compared with the same quarter of
2002.
Hector Medina, Executive Vice President of Planning and Finance, said "Twelve
months ago, we faced a global economy burdened by uncertainty and volatility,
offering few visible growth opportunities and subject to important downside
risks. The reality was, however, better than expected. Demand in markets such
as the United States, whose outlook was negative a year ago, grew
significantly during the second half of 2003. Led by the U.S. economic
expansion, the global economic environment has also moderately improved and
offers better prospects for the year ahead. For example, Mexico and Spain, our
other two major markets, grew at twice the rate of GDP growth or more. In
fact, visibility has improved for most of the markets in our portfolio. These
are growth markets on the upswing, and we feel that we are well prepared to
capitalize on their accelerating development during 2004. For all of these
reasons I've just mentioned, we approach 2004 with optimism.".
Fourth-quarter operating income increased 33% in dollar terms, to US$342
million. In real peso terms, operating income grew 31% to MXP3.8 billion. Our
selling, general and administrative (SG&A) expenses decreased 1% versus the
fourth quarter of 2002, but remained flat for the full year. As a percentage
of net sales, SG&A decreased 2.6 percentage points versus the same period in
2002 and 2.1 percentage points for the full year versus 2002. The improved
SG&A and SG&A margin is due to our ongoing cost-reduction initiatives which
lowered costs significantly at the corporate and plant levels.
Other net expenses for the quarter were US$188 million, versus US$109 million
in the fourth quarter of 2002. Of the US$188 million, US$17 million were cash
expenses. The increase in the non-cash portion of these expenses was due
mainly to the impairment of some assets in Asia.
Majority net income for the fourth quarter was US$91 million (US$0.28 per
ADR), versus US$166 million in the year-ago quarter. The decrease was due
mainly to losses in foreign exchange and marketable securities, as well as
higher other non-cash charges. In real peso terms, majority net income
decreased 46% to MXP1.03 billion.
At the end of the quarter, our net debt was US$5,641 million, representing a
reduction of 8% versus the fourth quarter of 2002. Free cash flow in the
amount of US$150 million was used to reduce debt during the quarter; when
expressed in dollar terms, however, net debt decreased by US$35 million due to
the appreciation of the yen and the euro versus the U.S. dollar during the
quarter
Our net debt to EBITDA ratio reached 2.7 times, versus 3.2 times at the end of
the 2002. CEMEX's interest coverage (EBITDA divided by interest expense plus
preferred dividends, all for the last twelve months) was 5.3 times, versus 5.2
times a year ago.
CEMEX's Mexican operations reported net sales of US$664 million in the fourth
quarter, a 5% growth versus the same period of 2002. EBITDA was down 1%, to
US$275 million. Domestic cement sales volumes increased 2% for the quarter and
4% for the full year 2003 versus comparable periods of last year. The
industrial and commercial sectors of the economy remain stable, with
infrastructure projects and social housing driving most of the demand growth.
In constant Mexican Pesos, CEMEX Mexico's net sales were MXP 6.96 billion,
down 6% versus fourth quarter 2002. For the full year, net sales were MXP
29.54 billion, up 4% versus 2002. Gross profit was down 8% for the quarter at
MXP 4.0 billion, and up 1% at MXP 17.0 billion for the full year. Operating
income reached MXP 2.51 billion, down 8% from fourth quarter 2002, and MXP
17.04 billion for the full year, an increase of 1% versus 2002.
In the United States, CEMEX's net sales were US$446 million, an increase of
14% compared to the year-earlier period. Quarterly EBITDA was 15% higher
year-over-year, reaching US$99 million. Cement sales volumes increased 10%
during the fourth quarter of 2003 and 2% for the full year, compared to the
year-earlier periods. The public works - particularly streets and highways -
and residential sectors were particularly strong in the second half of 2003,
while the industrial and commercial sector reversed its downward trend and is
now stable. Ready-mix volumes increased 1% for the quarter.
In constant Mexican Pesos, our CEMEX U.S. operations posted net sales of MXP
4.83 billion, up 5% versus fourth quarter 2002. For the full year, net sales
were MXP 19.47 billion, down 3% versus 2002. Gross profit was up 12% for the
quarter at MXP 1.65 billion, and down 11% at MXP 6.23 billion for the full
year. Operating income reached MXP 660 million, up 24% from fourth quarter
2002, and MXP 2.30 billion for the full year, a decrease of 26% versus 2002.
In Spain, CEMEX's net sales and EBITDA for the fourth quarter grew 18% and
13%, reaching US$275 and US$79 million, respectively, compared with the same
quarter of 2002. Domestic cement and ready-mix volumes increased 4% for the
quarter versus the year-earlier period, and 5% for the full year 2003.
Residential construction activity was high during the quarter, while spending
in public works remained strong due to Spain's infrastructure program.
In constant Mexican Pesos, CEMEX Spain's net sales were MXP 3.89 billion, up
17% versus fourth quarter 2002. For the full year, net sales were MXP 13.65
billion, up 21% versus 2002. Gross profit was up 10% for the quarter at MXP
1.40 billion, and up 13% at MXP 4.86 billion for the full year. Operating
income reached MXP 819 million, up 10% from fourth quarter 2002, and MXP 2.98
billion for the full year, an increase of 13% versus 2002.
CEMEX Venezuela reported a 26% growth in sales, reaching US$84 million. EBITDA
increased to US$38 million, 22% higher compared with the same period of 2002.
Domestic cement volumes increased 30%, while ready-mix volumes grew 36%. The
level of economic activity increased during the fourth quarter, and the
government increased its spending on infrastructure projects. Economic
activity during December of this year was significantly stronger than December
of 2002 due to the general strike in Venezuela at the end of 2002.
In constant Mexican Pesos, CEMEX Venezuela's net sales were MXP 1.03 billion,
up 1% versus fourth quarter 2002. For the full year, net sales were MXP 3.58
billion, up 3% versus 2002. Gross profit was down 5% for the quarter at MXP
486 million, and down 2% at MXP 1.67 billion for the full year. Operating
income reached MXP 346 million, up 6% from fourth quarter 2002, and MXP 1.20
billion for the full year, an increase of 6% versus 2002.
CEMEX Colombia's net sales were US$57 million, up 3% versus the year-ago
period. EBITDA, at US$34 million, decreased 4%. Cement volume was down 6%
versus the fourth quarter of 2002, while ready-mix volume grew 32%. Spending
on infrastructure during the quarter was weaker than previous periods as many
projects came to an end at the end of the year.
In constant Mexican Pesos, CEMEX Colombia's net sales were MXP 699 million, up
7% versus fourth quarter 2002. For the full year, net sales were MXP 2.48
billion, up 12% versus 2002. Gross profit was up 14% for the quarter at MXP
417 million, and up 13% at MXP 1.38 billion for the full year. Operating
income reached MXP 321 million, up 12% from fourth quarter 2002, and MXP 1.03
billion for the full year, an increase of 11% versus 2002.
Our operations in Central America and the Caribbean reported quarterly net
sales of US$135 million, down 5% vis-a-vis the fourth quarter of 2002. EBITDA
grew 15%, reaching US$33 million. Both cement and ready-mix sales volumes for
the quarter decreased 9%.
In constant Mexican Pesos, CEMEX's operations in Central America and the
Caribbean reported net sales of MXP 1.55 billion, flat versus fourth quarter
2002. For the full year, net sales were MXP 6.67 billion, up 16% versus 2002.
Gross profit was up 14% for the quarter at MXP 515 million, and flat at MXP
2.11 billion for the full year. Operating income reached MXP 287 million, up
29% from fourth quarter 2002, and MXP 1.18 billion for the full year, an
increase of 9% versus 2002.
CEMEX Egypt's sales increased 12% while domestic cement volumes decreased 22%
versus the fourth quarter of 2002. Investment in infrastructure during the
quarter was stronger than expected, and remains as the main driver of demand.
EBITDA grew 81% reached US$16 million.
In constant Mexican Pesos, CEMEX Egypt's net sales were MXP 436 million, up 1%
versus fourth quarter 2002. For the full year, net sales were MXP 1.51
billion, down 12% versus 2002. Gross profit was up 123% for the quarter at MXP
226 million, and up 14% at MXP 691 million for the full year. Operating income
reached MXP 105 million, up from a loss of 3 million in fourth quarter 2002,
and MXP 334 million for the full year, an increase of 51% versus 2002.
Our Asian operations, which include the Philippines, Thailand, Taiwan and
Bangladesh, posted net sales of US$45 million, 4% higher than the same quarter
of 2002. Domestic cement volumes declined 10%. Activity in the construction
sector in the Philippines remains at a low level, driven mainly by decreased
government spending in infrastructure. In constant Mexican Pesos, CEMEX's
operations in Asia reported net sales of MXP 473 million, down 4% versus
fourth quarter 2002. For the full year, net sales were MXP 2.08 billion, up 3%
versus 2002. Gross profit was up 21% for the quarter at MXP 153 million, and
up 7% at MXP 606 million for the full year. Operating income reached MXP 20
million, up from a loss of 89 million in fourth quarter 2002, and a loss of
MXP 77 million for the full year, a decrease of 13% versus 2002.
CEMEX is a leading global producer and marketer of cement and ready-mix
products, with operations concentrated in the world's most dynamic cement
markets across four continents. CEMEX combines a deep knowledge of the local
markets with its global network and information technology systems to provide
world-class products and services to its customers, from individual
homebuilders to large industrial contractors. For more information, visit
www.cemex.com.
----------------------------------------------------
EBITDA is defined as operating income plus depreciation and amortization. Free
Cash Flow is defined as EBITDA minus net interest expense, capital
expenditures, change in working capital, taxes paid, dividends on preferred
equity and other cash items. Net debt is defined as total debt plus equity
obligations minus cash and cash equivalents. All of the above items are
presented under generally accepted accounting principles in Mexico. EBITDA and
Free Cash Flow (as defined above) are presented herein because CEMEX believes
that they are widely accepted as financial indicators of CEMEX's ability to
internally fund capital expenditures and service or incur debt. EBITDA and
Free Cash Flow should not be considered as indicators of CEMEX's financial
performance, as alternatives to cash flow, as measures of liquidity or as
being comparable to other similarly titled measures of other companies.
EXHIBIT 2
[CEMEX GRAPHIC OMITTED]
Stock Listing Information
NYSE (ADR)
Ticker: CX
MEXICAN STOCK EXCHANGE
Ticker: CEMEX.CPO
Ratio of CEMEX.CPO to CX=5:1
Investor Relations
In the United States
1 877 7CX NYSE
In Mexico
52 (81) 8888 4292
E-Mail
ir@cemex.com
www.cemex.com
2003
FOURTH QUARTER RESULTS
Fourth quarter Fourth quarter
------------------------- -----------------------
2003 2002 % Var. 2003 2002
----------------------------------------------------------------------------------------------------
Net sales 1,787 1,621 10% % of Net Sales
----------------------------------------------------------------------------------------------------
Gross profit 757 675 12% 42.4% 41.7%
----------------------------------------------------------------------------------------------------
Operating income 342 256 33% 19.1% 15.8%
----------------------------------------------------------------------------------------------------
Majority net income 91 166 (45%) 5.1% 10.2%
----------------------------------------------------------------------------------------------------
EBITDA 509 417 22% 28.5% 25.8%
----------------------------------------------------------------------------------------------------
Free cash flow 247 304 (19%) 13.8% 18.8%
----------------------------------------------------------------------------------------------------
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Net debt 5,641 6,122 (8%)
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Net debt/EBITDA 2.7 3.2
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Interest coverage 5.3 5.2
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Quarterly earnings per ADR 0.28 0.54 (48%)
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Average ADRs outstanding 323.9 304.2 6%
----------------------------------------------------------------------------------------------------
In millions of U.S. dollars, except ratios and per-ADR amounts.
Average ADRs outstanding presented in millions of ADRs.
Consolidated net sales increased 10% over fourth quarter 2002 to US$1,787
million. Most of our major markets increased cement sales volumes as the
global economy expanded during the second half of the year. Our operations in
Spain, the United States and Mexico, our three largest markets, saw increased
public spending in infrastructure and housing.
Cost of goods sold as a percentage of net sales decreased 0.7 percentage
points versus fourth quarter 2002, but increased by 1.8 percentage points for
the full year, due mainly to overall higher energy, electricity, insurance,
and transportation costs.
Selling, general and administrative expenses (SG&A) decreased 1% versus fourth
quarter 2002, but remained flat for the full year. As a percentage of net
sales, SG&A decreased 2.6 percentage points versus the same period in 2002 and
2.1 percentage points for the full year versus 2002. The improved SG&A and
SG&A margin is due to our ongoing cost-reduction initiatives which lowered
costs significantly at the corporate and plant levels.
EBITDA increased to US$509 million, representing an increase of 22% over
fourth quarter 2002, and our consolidated EBITDA margin increased to 29% from
26% in the same period in 2002. The three percentage-point increase is due
mainly to higher sales volumes and lower SG&A.
Foreign exchange gain (loss) for the quarter was a loss of US$29 million,
versus a loss of US$5 million in fourth quarter 2002. The loss was mainly due
to the depreciation of the Mexican peso against the U.S. dollar.
Marketable securities gain (loss) for the quarter was a loss of US$25 million,
versus a gain of US$7 million in fourth quarter 2002. The loss is due to the
decrease in value of some of our currency swaps and interest-rate derivatives,
a portion of which is recognized in our income statement.
Other net expenses for the quarter were US$188 million, versus US$109 million
in fourth quarter 2002. Of the US$188 million, US$17 million were cash
expenses. The increase in the non-cash portion of these expenses was due
mainly to the impairment of some assets in Asia.
Majority net income for the quarter was US$91 million, versus US$166 million
in the fourth quarter of 2002. The decrease was due mainly to losses in
foreign exchange and marketable securities, as well as higher other non-cash
charges.
Net debt at the end of the fourth quarter was US$5,641 million, a decrease of
8% compared to that at the end of 2002. The ratio of net debt to EBITDA
reached 2.7 times, versus 3.2 times at the end of 2002. Free cash flow in the
amount of US$150 million was used to reduce debt during the quarter; when
expressed in dollar terms, however, net debt decreased by US$35 million due to
the appreciation of the yen and the euro versus the U.S. dollar during the
quarter.
Please refer to the end of this report for definition of terms, U.S. dollar
transaction methodology and other important disclosures.
EBITDA and Free Cash Flow
---------------------------------------------------------------------------------------------------------------------------
Fourth quarter January-December
------------------------ --------------------------
2003 2002 % Var. 2003 2002 % Var.
---------------------------------------------------------------------------------------------------------------------------
Operating income 342 256 33% 1,455 1,310 11%
---------------------------------------------------------------------------------------------------------------------------
+ Depreciation and operating amortization 167 161 653 607
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EBITDA 509 417 22% 2,108 1,917 10%
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- Net financial expense 91 81 364 288
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- Capital expenditures 132 132 393 416
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- Change in working capital 8 (161) 61 (2)
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- Taxes paid 16 33 73 165
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- Preferred dividend payments (2) 7 19 34
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- Other cash items 17 22 55 68
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Free cash flow 247 304 (19%) 1,143 948 21%
---------------------------------------------------------------------------------------------------------------------------
In millions of U.S. dollars.
During the quarter, US$247 million of free cash flow was used as follows:
US$150 million to reduce debt; however, net debt was reduced by US$35 million
during the quarter as a result of foreign exchange movements in the amount of
US$115 million; US$75 million to exercise an option to terminate an
asset-based financing transaction; and US$22 million in other investments.
EBITDA and free cash flow (calculated as set forth above) are presented herein
because CEMEX believes that they are widely accepted as financial indicators
of its ability to internally fund capital expenditures and to service or incur
debt. EBITDA and free cash flow should not be considered as indicators of
CEMEX's financial performance, as alternatives to cash flow, as measures of
liquidity or as being comparable to other similarly titled measures of other
companies. EBITDA is reconciled above to operating income, which CEMEX
considers to be the most comparable measure as determined under generally
accepted accounting principles in Mexico (GAAP). Free cash flow is reconciled
to EBITDA. CEMEX is not required to prepare a statement of cash flows under
Mexican accounting principles and, as such does not have such GAAP cash flow
measures to present as comparable to EBITDA or free cash flow.
Debt-Related Information
-------------------------------------------------------------------------------
Fourth quarter Third quarter Fourth quarter
------------------------- ----------------- --------------------
2003 2002 % Var. 2003 2003 2002
--------------------------------------------------------------------------- ----------------------------------------------
Total debt 5,866 5,767 2% 5,368 Currency denomination
---------------------------------------------------------------------------
Short term 23% 24% 21%
--------------------------------------------------------------------------- ----------------------------------------------
Long term 77% 76% 79% U.S. dollar 68% 72%
--------------------------------------------------------------------------- ----------------------------------------------
Equity obligations 66 716 (91%) 716 Yen 13% 13%
--------------------------------------------------------------------------- ----------------------------------------------
Cash & cash equivalents 291 361 (19%) 409 Euro 18% 11%
--------------------------------------------------------------------------- ----------------------------------------------
Net debt 5,641 6,122 (8%) 5,676 Other 1% 4%
--------------------------------------------------------------------------- ----------------------------------------------
---------------------------------------------------------------------------
Interest expense 94 87 94 Interest rate
---------------------------------------------------------------------------
Preferred dividends (2) 7 7
--------------------------------------------------------------------------- ----------------------------------------------
Interest coverage 5.3 5.2 5.0 Fixed 61% 39%
--------------------------------------------------------------------------- ----------------------------------------------
Net debt/EBITDA 2.7 3.2 2.8 Variable 39% 36%
--------------------------------------------------------------------------- -----------------------------------------------
Capitalization ratio 46.7% 47.5% 44.4% Fixed deferred 0% 25%
--------------------------------------------------------------------------- -----------------------------------------------
In millions of U.S. dollars, except ratios.
Other developments
During the fourth quarter we closed through one of our subsidiaries in Europe
a new two and three-year multi-tranche loan in euros, dollars and yens. The
transaction was over-subscribed and totaled the equivalent of US$1.15 billion.
The proceeds were used to repurchase the remaining US$650 million in preferred
equity and to refinance US$400 million outstanding under a Revolving Credit
Facility, both of which were scheduled to mature in 2004.
Please refer to the end of this report for definition of terms, U.S. dollar
transaction methodology and other important disclosures.
Equity-Related Information
-------------------------------------------------------------------------------
One CEMEX ADR represents five CEMEX CPOs. The following amounts are expressed
in CPO terms.
Beginning-of-quarter CPO-equivalent units outstanding 1,619,029,837
------------------------------------------------------- ----------------------
Exercise of stock options not hedged 1,165,702
Change in the number of CPOs held in subsidiaries 16,970
End-of-quarter CPO-equivalent units outstanding 1,620,212,509
------------------------------------------------------- ----------------------
Outstanding units equal total shares issued by CEMEX less shares held in
subsidiaries.
Employee stock-option plans
As of December 31, 2003, directors, officers and other employees under our
employee stock-option plans had outstanding options to acquire 150,502,054
CEMEX CPOs. Of the total options outstanding, 96.2% are hedged through equity
forward agreements and will not dilute existing shares when exercised. The
total amount of these options programs represents 9.3% of total CPOs
outstanding.
Derivative Instruments
-------------------------------------------------------------------------------
CEMEX periodically utilizes derivative financial instruments such as
interest-rate and currency swaps, currency and equity forward contracts,
options and futures in order to execute its corporate financing strategy and
to hedge its stock-option plans and other equity-related obligations.
The following table shows the notional amount for each type of derivative
instrument and the aggregate fair market value for all of CEMEX's derivative
instruments as of the last day of each quarter presented.
Fourth quarter Third quarter
Notional amounts 2003 2002 2003
-----------------------------------------------------------------------------------------------------
Equity * 1,085 1,452 1,532
Foreign-exchange 2,893 3,174 3,090
Interest-rate 2,224 3,644 3,233
-----------------------------------------------------------------------------------------------------
Estimated aggregate fair market value (233) (415) (162)
-----------------------------------------------------------------------------------------------------
In millions of U.S. dollars.
The estimated aggregate fair market value represents the approximate
settlement result as of the valuation date, based upon quoted market prices
and estimated settlement costs, which fluctuate over time. Fair market values
and notional amounts do not represent amounts of cash currently exchanged
between the parties; cash amounts will be determined upon termination of the
contracts considering the notional amounts and quoted market prices, as well
as the other derivative items as of the settlement date. Fair market values
should not be viewed in isolation but rather in relation to the fair values of
the underlying hedge transactions and the overall reduction in the company's
exposure to the risks being hedged.
* The aggregate weighted-average exercise price on December 31, 2003 for
CEMEX's outstanding stock options, warrants and the CEMEX Asia Holdings
obligation described in prior quarterly reports was US$25.54 per ADR. On that
same date, the aggregate weighted-average strike price of CEMEX's equity
forward agreements put in place to hedge its obligations under the
abovementioned stock options was US$26.76 per ADR.
Under Mexican GAAP ("Bulletin C-2"), companies are required to recognize all
derivative financial instruments in the balance sheet as assets or
liabilities, at their estimated fair market value, with changes in such fair
values recorded on the income statement. The exceptions to the rule, as they
pertain to CEMEX, are presented when transactions are entered for hedging
purposes. In such cases, the related derivative financial instruments should
be valued using the same valuation criteria applied to the hedged asset,
liability or equity instrument. CEMEX has recognized increases in assets and
liabilities, which resulted in a net liability of US512 million, arising from
the fair value recognition of its derivatives portfolio as of December 31,
2003. The notional amounts of derivatives substantially match the amounts of
underlying assets, liabilities or equity transactions on which the derivatives
are being entered into.
Please refer to the end of this report for definition of terms, U.S. dollar
transaction methodology and other important disclosures.
Other Activities
-------------------------------------------------------------------------------
CEMEX successfully completes non-dilutive equity offering
On October 29, 2003, CEMEX announced that a total of 29.325 million ADSs were
sold by it and certain selling ADS holders in the non-dilutive equity
offering, which included the sale of 25.5 million ADSs completed on October
21, 2003, and the sale of an additional 3.825 million ADSs to cover
over-allotments completed on October 29, 2003. The underwriters fully
exercised their option to purchase the additional 3.825 million ADSs from
CEMEX and the selling ADSs holders to cover over-allotments.
The 29.325 million ADSs were sold in the form of both ADSs and CPOs, comprised
of 23.325 million ADSs and 30 million CPOs. One ADS represents five CPOs. The
ADSs were offered to the public at a price of US$23.15 per ADS, and the CPOs
were offered to the public at a price of MXP 52.07 per CPO.
The aggregate proceeds of the offering, including proceeds from the exercise
of the over-allotment option, received by CEMEX and the selling ADS holders
were approximately US$660 million, after underwriting discounts and
commissions. Approximately US$538 million of these proceeds were used to
unwind several forward contracts entered into between certain subsidiaries of
CEMEX and certain banks, including the selling ADS holders, with the remaining
approximately US$122 million, before expenses of the offering, paid to CEMEX.
The net proceeds to CEMEX were primarily used to reduce CEMEX's derivatives
position, and for debt reduction.
This transaction did not increase the number of shares outstanding and thus
did not dilute shareholders.
Please refer to the end of this report for definition of terms, U.S. dollar
transaction methodology and other important disclosures.
Operating Results - Mexico
-------------------------------------------------------------------------------
In Mexico, net sales were US$664 million, an increase of 5% versus fourth
quarter 2002.
Domestic gray cement volume increased 2% versus fourth quarter 2002, and for
the full year rose 4%. Ready-mix volume increased 11% versus the same period
in 2002 and 13% for the full year. The industrial and commercial sectors of
the economy remain stable, with infrastructure projects and social housing
driving most of the demand growth.
CEMEX's average realized gray cement price in Mexico increased 2% in constant
pesos versus fourth quarter 2002, and decreased 3% in dollar terms. For the
full year 2003, gray cement prices increased 2% in constant pesos and
decreased 4% in dollar terms versus 2002. The average ready-mix price
increased 1% in constant pesos and decreased 4% in dollar terms compared to
fourth quarter 2002. For the full year 2003, ready mix prices decreased 2% in
constant pesos and 8% in dollar terms versus 2002.
The average cash cost of goods sold per metric ton decreased 3% in dollar
terms versus fourth quarter 2002, and 5% for the full year. The decrease in
these costs in dollar terms is due mainly to the depreciation of the Mexican
peso between December 2002 and December 2003.
United States
-------------------------------------------------------------------------------
Net sales for CEMEX's U.S. operations were US$446 million, an increase of 14%
compared to fourth quarter 2002.
Domestic cement volume increased 10% compared to fourth quarter 2002 and 2%
for the full year. Ready-mix volume increased 9% versus fourth quarter 2002
and 4% for the full year. The public works - particularly streets and highways
- and residential sectors were particularly strong in the second half of 2003,
while the industrial and commercial sector reversed its downward trend and is
now more stable.
The average realized cement price decreased 1% versus fourth quarter 2002 and
2% for the full year, while the average ready-mix price increased 1% over the
same period in 2002 and remained flat for the full year.
The average cash cost of goods sold per metric ton decreased 3% versus fourth
quarter 2002, due mainly to lower energy costs. For the full year, cash costs
per metric ton decreased 1%.
Spain
-------------------------------------------------------------------------------
Net sales for CEMEX Spain were US$275 million, representing an increase of 18%
versus fourth quarter 2002.
Domestic cement volume increased 4% compared to fourth quarter 2002 and 5% for
the full year. Ready-mix volume increased 4% versus the same period in 2002
and 5% for the full year 2003. Residential construction activity was high
during the quarter, while spending in public works remained strong due to
Spain's infrastructure program.
The average domestic cement price remained flat in euros and increased 19% in
dollar terms compared to fourth quarter 2002. For the full year, cement prices
were 1% lower in euros and 18% higher in dollar terms versus 2002. The average
ready-mix price increased 2% in euros and 21% in dollar terms versus fourth
quarter 2002. For the full year, prices remained flat in euros and were 20%
higher in dollar terms.
The average cash cost of goods sold per metric ton increased 28% in dollar
terms versus fourth quarter 2002 and 30% for the full year. The increase in
cash costs, when expressed in dollar terms, is due mainly to the appreciation
of the euro versus the U.S. dollar between December 2002 and December 2003.
Please refer to the end of this report for definition of terms, U.S. dollar
transaction methodology and other important disclosures.
Venezuela
-------------------------------------------------------------------------------
Domestic cement volume for CEMEX's Venezuelan operations increased 30%
compared to fourth quarter 2002 and decreased 13% for the full year versus
2002. Ready-mix volume increased 36% over fourth quarter 2002 but decreased 6%
for the full year compared to 2002. The level of economic activity increased
compared to the fourth quarter of 2002, and the government increased its
spending on infrastructure projects. Economic activity during December of this
year was significantly stronger than in December 2002 because of the general
strike in Venezuela at the end of 2002.
Export volume from CEMEX's Venezuelan operations increased 17% compared to
fourth quarter 2002 and was up 17% for the full year. The North America and
Caribbean regions accounted for 80% and 20%, respectively, of CEMEX
Venezuela's fourth quarter exports.
Domestic cement prices decreased 6% in constant bolivar terms and increased 2%
in dollar terms compared to fourth quarter 2002. For the full year, cement
prices were 3% higher in constant bolivars and 1% lower in dollar terms. The
average ready-mix price increased 3% in constant bolivar terms, and 12% in
dollar terms compared to fourth quarter 2002. For the full year, ready-mix
prices were 6% higher in constant bolivars and flat in dollar terms.
The average cash cost of goods sold per metric ton increased 15% in dollar
terms compared to fourth quarter 2002. For the full year, cash costs per
metric ton were down 3% in dollar terms.
Colombia
-------------------------------------------------------------------------------
Domestic cement volume for CEMEX's Colombian operations decreased 6% compared
to fourth quarter 2002, while for the full year 2003, volume rose 1% compared
to 2002. Ready-mix volume increased 32% versus fourth quarter 2002 and 34% for
the full year. Spending on infrastructure was weaker than in previous periods
because many projects were concluded at the end of the year.
CEMEX's average realized cement price in Colombia was flat in Colombian pesos
and 1% lower in dollar terms versus fourth quarter 2002. For the full year
2003, cement prices were 6% higher in Colombian pesos and 7% lower in dollar
terms versus 2002. The average ready-mix price increased 7% in Colombian pesos
and 6% in dollar terms versus fourth quarter 2002. For the full year,
ready-mix prices were 4% higher in Colombian pesos and 8% lower in dollar
terms versus 2002.
The average cash cost of goods sold per metric ton increased 12% in dollar
terms versus fourth quarter 2002. During 2003, cash costs per metric ton were
11% higher in dollar terms versus 2002.
Other Operations
-------------------------------------------------------------------------------
Net sales for our Central American and Caribbean operations decreased 5%
versus fourth quarter 2002. The decline was due mainly to lower sales volumes
in Puerto Rico, Costa Rica, and the Dominican Republic. For the full year, net
sales increased 15% versus 2002. Domestic cement volume decreased 9% versus
fourth quarter 2002 and rose 5% for the full year, while Ready-mix volume
dropped 9% versus fourth quarter 2002 and grew 72% for the full year. The
full-year increase in ready mix volume is due mainly to the acquisition of
Puerto Rican Cement Company, which has sizeable ready-mix operations and was
included in our 2002 consolidated results for only five months. Our ready
mix-operations in Panama, Costa Rica, and the Dominican Republic also
contributed positively to the increased ready-mix volume for the year.
In Egypt, net sales increased 12%, while domestic cement volume fell 22%
versus fourth quarter 2002. Investment in infrastructure, although lower than
that during fourth quarter 2002, was stronger than expected and remains the
main driver of demand. Domestic cement prices were 55% higher in Egyptian
pounds and 17% higher in dollar terms versus fourth quarter 2002.
Our Asian operations, which include the Philippines, Thailand, Taiwan and
Bangladesh, increased net sales by 4% versus fourth quarter 2002, as our
Philippine and Thai operations experienced an improvement in sales. Domestic
cement volume for the region decreased 10% compared to fourth quarter 2002 and
2% for the full year. Our weighted-average domestic cement prices in the
region increased 25% in dollar terms versus the same period in 2002, and were
2% higher for the full year. Activity in the construction sector in the
Philippines remains at a low level, driven mainly by decreased government
infrastructure spending.
Please refer to the end of this report for definition of terms, U.S. dollar
transaction methodology and other important disclosures.
Consolidated Income Statement & Balance Sheet
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of U.S. Dollars, except per ADR amounts)
January - December
Fourth quarter
INCOME STATEMENT 2003 2002 % Var. 2003 2002 % Var.
---------------------------- ------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Net Sales 7,164,384 6,543,087 9% 1,786,908 1,620,644 10%
Cost of Sales (4,130,046) (3,655,500) 13% (1,029,487) (945,212) 9%
-------------------------------------------------------------------------------------------------------------------------------
Gross Profit 3,034,338 2,887,587 5% 757,421 675,432 12%
Selling, General and Administrative Expenses (1,579,134) (1,577,191) 0% (415,859) (419,052) (1%)
-------------------------------------------------------------------------------------------------------------------------------
-----------------
Operating Income 1,455,204 1,310,396 11% 341,562 256,380 33%
Financial Expenses (380,648) (332,522) 14% (93,723) (86,950) 8%
Financial 16,691 44,605 (63%) 2,502 6,067 (59%)
Income
Exchange Gain (Loss), Net (171,589) (77,100) 123% (29,080) (5,263) 453%
Monetary Position Gain (Loss) 327,667 352,145 (7%) 90,424 97,585 (7%)
Gain (Loss) on Marketable Securities (59,570) (316,480) (81%) (24,649) 6,930 N/A
Total Comprehensive Financing (Cost) Income (267,449) (329,353) (19%) (54,525) 18,369 N/A
Other Expenses, Net (456,737) (389,276) 17% (187,672) (109,170) 72%
-------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 731,017 591,768 24% 99,365 165,578 (40%)
Income Tax (89,612) (54,837) 63% (13,301) (5,084) 162%
Employees' Statutory Profit Sharing (16,989) (10,299) 65% (9,148) (1,452) 530%
Total Income Tax & Profit Sharing (106,601) (65,136) 64% (22,448) (6,536) 243%
-------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 624,416 526,631 19% 76,917 159,042 (52%)
Participation in Unconsolidated Subsidiaries 34,768 30,703 13% 17,346 9,355 85%
Consolidated Net Income 659,184 557,334 18% 94,262 168,397 (44%)
Net Income Attributable to Min. Interest 30,412 37,063 (18%) 2,929 2,786 5%
MAJORITY INTEREST NET INCOME 628,772 520,272 21% 91,333 165,611 (45%)
-------------------------------------------------------------------------------------------------------------------------------
EBITDA 2,108,028 1,917,064 10% 508,524 417,464 22%
Earnings per ADR 1.99 1.74 15% 0.28 0.54 (48%)
-------------------------------------------------------------------------------------------------------------------------------
As of December 31
BALANCE SHEET 2003 2002 % Var.
-------------------------------------------------------------------------------------------------------------------------------
Total Assets 16,015,780 15,934,483 1%
Cash and Temporary Investments 291,382 361,155 (19%)
Trade Accounts Receivables 469,534 400,854 17%
Other Receivables 404,217 404,070 0%
Inventories 594,580 706,743 (16%)
Other Current Assets 66,684 79,855 (16%)
Current Assets 1,826,396 1,952,677 (6%)
Fixed Assets 9,265,408 8,963,135 3%
Other Assets 4,923,975 5,018,671 (2%)
-----------------------------------------------------------------------------------
Total
Liabilities 9,249,638 8,983,384 3%
Current
Liabilities 2,829,344 2,954,064 (4%)
Long-Term Liabilities 4,536,828 4,373,888 4%
Other
Liabilities 1,883,465 1,655,431 14%
-----------------------------------------------------------------------------------
Consolidated Stockholders' Equity 6,766,142 6,951,099 (3%)
Stockholders' Equity Attributable to Minority
Interest 531,965 1,206,785 (56%)
Stockholders' Equity Attributable to Majority
Interest 6,234,177 5,744,314 9%
-------------------------------------------------------------------------------------------------------------------------------
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 7
and other important disclosures.
Consolidated Income Statement & Balance Sheet
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of Mexican Pesos in real terms as of December 31, 2003
except per ADR amounts)
January - December Fourth quarter
INCOME STATEMENT 2003 2002 % Var. 2003 2002 % Var.
----------------------------- ------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Net Sales 80,527,677 75,042,021 7% 20,084,845 18,586,890 8%
Cost of Sales (46,421,722) (41,924,570) 11% (11,571,430) (10,840,480) 7%
-------------------------------------------------------------------------------------------------------------------------------
Gross Profit 34,105,955 33,117,451 3% 8,513,414 7,746,410 10%
Selling, General and Administrative Expenses (17,749,464) (18,088,647) (2%) (4,674,259) (4,806,035) (3%)
-------------------------------------------------------------------------------------------------------------------------------
Operating Income 16,356,491 15,028,803 9% 3,839,155 2,940,374 31%
Financial Expenses (4,278,480) (3,813,668) 12% (1,053,442) (997,211) 6%
Financial 187,606 511,573 (63%) 28,128 69,581 (60%)
Income
Exchange Gain (Loss), Net (1,928,665) (884,277) 118% (326,862) (60,352) 442%
Monetary Position Gain (Loss) 3,682,977 4,038,703 (9%) 1,016,370 1,119,184 (9%)
Gain (Loss) on Marketable Securities (669,569) (3,629,737) (82%) (277,056) 79,482 N/A
Total Comprehensive Financing (Cost) Income (3,006,131) (3,777,406) (20%) (612,863) 210,685 N/A
Other Expenses, Net (5,133,726) (4,464,558) 15% (2,109,430) (1,252,048) 68%
-------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 8,216,635 6,786,839 21% 1,116,862 1,899,009 (41%)
Income Tax (1,007,244) (628,907) 60% (149,501) (58,311) 156%
Employees' Statutory Profit Sharing (190,956) (118,123) 62% (102,818) (16,650) 518%
Total Income Tax & Profit Sharing (1,198,200) (747,030) 60% (252,319) (74,961) 237%
-------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 7,018,435 6,039,810 16% 864,544 1,824,050 (53%)
Participation in Unconsolidated Subsidiaries 390,794 352,128 11% 194,965 107,286 82%
Consolidated Net Income 7,409,229 6,391,938 16% 1,059,509 1,931,335 (45%)
Net Income Attributable to Min. Interest 341,834 425,051 (20%) 32,920 31,953 3%
MAJORITY INTEREST NET INCOME 7,067,395 5,966,888 18% 1,026,588 1,899,383 (46%)
-------------------------------------------------------------------------------------------------------------------------------
EBITDA 23,694,237 21,986,547 8% 5,715,812 4,787,838 19%
Earnings per ADR 18.05 24% 5.65 (44%)
22.42 3.17
-------------------------------------------------------------------------------------------------------------------------------
As of
December 31
BALANCE SHEET 2003 2002 % Var.
-------------------------------------------------------------------------------------------------------------------------------
Total Assets 180,017,367 182,750,383 (1%)
Cash and Temporary Investments 3,275,131 4,142,035 (21%)
Trade Accounts Receivables 5,277,561 4,597,340 15%
Other Receivables 4,543,395 3,641,689 25%
Inventories 6,683,083 8,105,542 (18%)
Other Current Assets 749,525 1,908,378 (61%)
Current Assets 20,528,695 22,394,981 (8%)
Fixed Assets 104,143,188 102,796,955 1%
Other Assets 55,345,484 57,558,447 (4%)
------------------------------------------------------------------------------------
Total
Liabilities 103,965,928 103,029,193 1%
Current
Liabilities 31,801,830 33,879,756 (6%)
Long-Term Liabilities 50,993,951 50,163,523 2%
Other
Liabilities 21,170,146 18,985,913 12%
------------------------------------------------------------------------------------
Consolidated Stockholders' Equity 76,051,440 79,721,191 (5%)
Stockholders' Equity Attributable to Minority
Interest 5,979,292 13,840,448 (57%)
Stockholders' Equity Attributable to Majority
Interest 70,072,148 65,880,743 6%
-------------------------------------------------------------------------------------------------------------------------------
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 8
and other important disclosures.
Operating Summary per Country
In thousands of U.S. dollars
January - December Fourth quarter
--------------------------- --------------------------
NET SALES 2003 2002 % Var. 2003 2002 % Var.
----------------------------------------------------------------------------------------------------------------------------
Mexico 2,628,544 2,483,061 6% 663,625 634,698 5%
U.S.A. 1,718,265 1,735,539 (1%) 445,625 391,521 14%
Spain 1,195,432 964,756 24% 275,068 232,166 18%
Venezuela 318,894 303,602 5% 83,840 66,710 26%
Colombia 217,234 189,159 15% 57,323 55,504 3%
Egypt 132,288 145,978 (9%) 39,300 35,135 12%
Central America & the Caribbean region 562,301 490,104 15% 134,731 141,783 (5%)
Asia region 187,204 180,572 4% 45,273 43,413 4%
----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 204,222 50,316 306% 42,123 19,714 114%
----------------------------------------------------------------------------------------------------------------------------
TOTAL 7,164,384 6,543,087 9% 1,786,908 1,620,644 10%
----------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT
----------------------------------------------------------------------------------------------------------------------------
Mexico 1,516,616 1,474,069 3% 381,105 374,465 2%
U.S.A. 549,817 605,107 (9%) 152,212 126,005 21%
Spain 425,234 366,908 16% 98,792 88,578 12%
Venezuela 148,358 148,152 0% 39,446 33,798 17%
Colombia 121,124 104,002 16% 34,454 31,210 10%
Egypt 60,491 51,166 18% 20,350 7,956 156%
Central America & the Caribbean region 179,995 157,486 14% 45,324 40,693 11%
Asia region 53,657 46,123 16% 14,453 10,659 36%
----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (20,955) (65,427) (68%) (28,714) (37,933) (24%)
----------------------------------------------------------------------------------------------------------------------------
TOTAL 3,034,338 2,887,587 5% 757,421 675,432 12%
----------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME
----------------------------------------------------------------------------------------------------------------------------
Mexico 1,023,738 985,331 4% 237,487 244,370 (3%)
U.S.A. 219,998 275,813 (20%) 59,331 47,881 24%
Spain 255,770 231,084 11% 53,904 52,417 3%
Venezuela 103,465 99,634 4% 26,361 21,307 24%
Colombia 87,750 80,112 10% 25,011 24,767 1%
Egypt 28,611 19,047 50% 8,708 (556) N/A
Central America & the Caribbean region 97,073 92,668 5% 23,800 19,823 20%
Asia region (11,815) (13,713) (14%) (3,106) (6,453) (52%)
----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (349,386) (459,580) (24%) (89,934) (147,177) (39%)
----------------------------------------------------------------------------------------------------------------------------
TOTAL 1,455,204 1,310,396 11% 341,562 256,380 33%
----------------------------------------------------------------------------------------------------------------------------
EBITDA
----------------------------------------------------------------------------------------------------------------------------
Mexico 1,166,338 1,113,772 5% 274,875 276,527 (1%)
U.S.A. 369,937 419,171 (12%) 99,286 86,069 15%
Spain 339,055 291,658 16% 78,635 69,824 13%
Venezuela 152,680 143,743 6% 38,110 31,331 22%
Colombia 129,597 116,689 11% 34,197 35,628 (4%)
Egypt 57,844 57,538 1% 16,284 9,001 81%
Central America & the Caribbean region 133,699 120,106 11% 33,426 29,071 15%
Asia region 19,265 17,223 12% 4,377 1,003 336%
----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (260,386) (362,836) (28%) (70,666) (120,988) (42%)
----------------------------------------------------------------------------------------------------------------------------
TOTAL 2,108,028 1,917,064 10% 508,524 417,464 22%
----------------------------------------------------------------------------------------------------------------------------
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 9
and other important disclosures.
Operating Summary per Country
As a percentage of net sales
January - December Fourth quarter
------------------------- -------------------------
OPERATING INCOME MARGIN 2003 2002 2003 2002
------------------------------------------------------------------------------------------------------------------
Mexico 38.9% 39.7% 35.8% 38.5%
U.S.A. 12.8% 15.9% 13.3% 12.2%
Spain 21.4% 24.0% 19.6% 22.6%
Venezuela 32.4% 32.8% 31.4% 31.9%
Colombia 40.4% 42.4% 43.6% 44.6%
Egypt 21.6% 13.0% 22.2% (1.6%)
Central America & the Caribbean region 17.3% 18.9% 17.7% 14.0%
Asia region (6.3%) (7.6%) (6.9%) (14.9%)
------------------------------------------------------------------------------------------------------------------
CONSOLIDATED MARGIN 20.3% 20.0% 19.1% 15.8%
------------------------------------------------------------------------------------------------------------------
EBITDA MARGIN
------------------------------------------------------------------------------------------------------------------
Mexico 44.4% 44.9% 41.4% 43.6%
U.S.A. 21.5% 24.2% 22.3% 22.0%
Spain 28.4% 30.2% 28.6% 30.1%
Venezuela 47.9% 47.3% 45.5% 47.0%
Colombia 59.7% 61.7% 59.7% 64.2%
Egypt 43.7% 39.4% 41.4% 25.6%
Central America & the Caribbean region 23.8% 24.5% 24.8% 20.5%
Asia region 10.3% 9.5% 9.7% 2.3%
-----------------------------------------------------------------------------------------------------------------
CONSOLIDATED MARGIN 29.4% 29.3% 28.5% 25.8%
------------------------------------------------------------------------------------------------------------------
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology
and other important disclosures.
Volume Summary
Consolidated volume summary
Cement: Thousands of metric tons
Ready-mix: Thousands of cubic meters
January - December Fourth quarter
----------------------------- ---------------------------
2003 2002 % Var. 2003 2002 % Var.
----------------------------------------------------------------------------------------------------------------------------------
Consolidated cement volume 64,650 61,823 5% 16,273 15,610 4%
Consolidated ready-mix volume 21,669 19,224 13% 5,460 4,902 11%
----------------------------------------------------------------------------------------------------------------------------------
Per-country volume summary
January - December Fourth quarter Fourth quarter 2003 Vs.
DOMESTIC CEMENT VOLUME 2003 Vs. 2002 2003 Vs. 2002 Third quarter 2003
----------------------------------------------------------------------------------------------------------------------------------
Mexico 4% 2% 2%
U.S.A. 2% 10% (10%)
Spain 5% 4% (0%)
Venezuela (13%) 30% 8%
Colombia 1% (6%) (4%)
Egypt (12%) (22%) (11%)
Central America & the Caribbean region 5% (9%) (6%)
Asia Region (2%) (10%) 7%
----------------------------------------------------------------------------------------------------------------------------------
READY-MIX VOLUME
----------------------------------------------------------------------------------------------------------------------------------
Mexico 13% 11% 1%
U.S.A. 4% 9% 2%
Spain 5% 4% (8%)
Venezuela 3% 56% 2%
Colombia 34% 32% (0%)
Central America & the Caribbean region 72% (9%) (20%)
Asia Region N/A N/A N/A
----------------------------------------------------------------------------------------------------------------------------------
EXPORT CEMENT VOLUME
----------------------------------------------------------------------------------------------------------------------------------
Mexico (24%) (14%) (3%)
Spain (21%) (26%) 4%
Venezuela 17% 17% (10%)
----------------------------------------------------------------------------------------------------------------------------------
Please refer to the end of this report for definition of terms, U.S. dollar
translation methodology Page 11 and other important disclosures.
Price Summary
Fourth quarter 2003 Vs.
Fourth quarter 2003 Vs. 2002 Third quarter 2003
-------------------------------------- ---------------------------------
% Var. % Var. % Var. % Var.
DOMESTIC CEMENT PRICE U.S. dollar Local currency U.S. dollar Local currency
----------------------------------------------------------------------------------------------------------------------------------
Mexico (1) (3%) 2% (3%) (2%)
U.S.A. (1%) (1%) (1%) (1%)
Spain 19% (0%) 6% (0%)
Venezuela (1) 2% (6%) 1% (4%)
Colombia (1%) (0%) (1%) (2%)
Egypt 17% 55% 4% 4%
Central America & the Caribbean region (2) 6% N/A (1%) N/A
Asia Region (2) 25% N/A 4% N/A
----------------------------------------------------------------------------------------------------------------------------------
READY-MIX PRICE
----------------------------------------------------------------------------------------------------------------------------------
Mexico (1) (4%) 1% (3%) (2%)
U.S.A. 1% 1% 0% 0%
Spain 21% 2% 9% 3%
Venezuela (1) 12% 3% (1%) (5%)
Colombia 6% 7% 3% 2%
Central America & the Caribbean region (2) (1%) N/A 3% N/A
Asia Region (2) (2%) N/A 1% N/A
----------------------------------------------------------------------------------------------------------------------------------
1) Local currency price variation for Mexico and Venezuela is presented in constant currency terms as of December 31, 2003.
2) Volume weighted-average price.
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology
and other important disclosures.
Definition of Terms and Disclosures
-------------------------------------------------------------------------------
Methodology for consolidation and presentation of results
CEMEX consolidates its results in Mexican pesos under Mexican generally
accepted accounting principles. For the convenience of the reader, U.S. dollar
amounts for the consolidated entity are calculated by converting the
constant-Mexican peso amounts at the end of each quarter using the end of
period Mexican peso/U.S. dollar exchange rate for each quarter. The exchange
rates used to convert results for the third quarter of 2003, second quarter of
2003 and third quarter of 2002 are 11.00, 10.46 and 10.22 Mexican pesos per 1
U.S. dollar, respectively. CEMEX's weighted average inflation factor between
September 30, 2002 and September 30, 2003 was 7.66%.
Per-country figures are presented in U.S. dollars for the convenience of the
reader. In the consolidation process, each country's figures are converted to
U.S. dollars (except CEMEX Mexico) and then to Mexican pesos under Mexican
generally accepted accounting principles. Each country's figures presented in
U.S. dollars at September 30, 2003 and September 30, 2002 can be converted to
its original local currency amount by multiplying the U.S. dollar figure by
the corresponding exchange rate provided below.
To convert September 30, 2002 U.S. dollar figures for Mexico and Venezuela to
constant pesos and bolivars, respectively, as of September 30, 2003 it is
necessary to first convert the September 30, 2002 U.S. dollars to the
corresponding local currency (using the exchange rates provided below), and
then multiply the resulting amount by the inflation rate factor provided in
the table below.
September 30
----------------------------
Exchange rate 2003 2002 Inflation rate factor
------------------------------------------------------------------------------------------
Mexico 11.00 10.22 1.040
Spain 0.86 1.01
Venezuela 1,600 1,474 1.290
Colombia 2,889 2,828
Egypt 6.16 4.64
------------------------------------------------------------------------------------------
The Central America & Caribbean region includes CEMEX's operations in Costa
Rica, the Dominican Republic, Panama, Nicaragua and Puerto Rico, as well as
our trading operations in the Caribbean region. The Asia region includes
CEMEX's operations in the Philippines, Taiwan, Thailand and Bangladesh.
CEMEX's quarterly reports before 2003 consolidated CEMEX's operations in
Panama and the Dominican Republic into Venezuela. Beginning in 2003, CEMEX's
Venezuelan operations do not include Panama and the Dominican Republic for
presentation purposes, but are now consolidated into the Central America &
Caribbean region. For comparison purposes, Venezuela's and Central America &
Caribbean region's figures for 2002 were restated to make them comparable with
the new disclosure procedures.
Definition of terms
EBITDA. Equals operating income plus depreciation and operating amortization.
Free cash flow. Equals EBITDA minus net interest expense, capital
expenditures, change in working capital, taxes paid, dividends on preferred
equity, and other cash items.
Capital expenditures. Maintenance spending on our cement and ready mix
businesses, and expansion of current facilities of cement and ready mix.
Equity obligations. Equal the outstanding US$650 million balance of preferred
equity plus the outstanding US$66 million of preferred capital securities.
Net debt. Equals total debt plus equity obligations, minus cash and cash
equivalents. Interest plus preferred dividend coverage. Is calculated by
dividing EBITDA for the last twelve months by the sum of interest expense and
preferred dividend payments for the last twelve months (all amounts in
constant currency terms). Net debt/EBITDA. Is calculated by dividing net debt
at the end of the quarter by EBITDA for the last twelve months (EBITDA in
constant currency terms).
Capitalization ratio. Is calculated by dividing the sum of total debt, the
US$66 million outstanding preferred capital securities, and the present value
of the forward agreements put in place to hedge our warrant obligations by the
sum of total debt, the US$66 million outstanding preferred capital securities,
the present value of the forward agreements put in place to hedge our warrant
obligations and consolidated stockholders' equity.
Earnings per ADR
For the calculation of earnings per ADR, the number of average ADRs
outstanding used was as follows: 323.3 million for the third quarter of 2003
and 304.2 million for the third quarter of 2002; 312.3 million for the first
nine months of 2003, and 297.5 million for the first nine months of 2002.